ERP Training Korea Telecom 2007 Olson ERP 5

ERP Training Korea Telecom 2007 Olson: ERP 5

Organizational Benefits • • • Cost reduction Cycle time reduction Productivity improvement Quality improvement Customer services improvement Korea Telecom 2007 Olson: ERP 5

Managerial Improvement • Improved resource management • Better decision making – Hard to prove • Better planning • Performance improvement Korea Telecom 2007 Olson: ERP 5

Strategic Improvement • Support business growth • Support business alliances – If they have the same system • Build business innovations – ? System can be constraining • Build cost leadership • Generate product differentiation – ? ? Over time, only if you customize • Build external linkages – ? If they have the same system Korea Telecom 2007 Olson: ERP 5

IT Infrastructure Improvement • Build business flexibility – ? ? ? ERP inherently a rigid system • IT cost reduction – The main reason CEOs adopt ERP • Increased IT capability Korea Telecom 2007 Olson: ERP 5

Organizational • Support organizational change – FORCE organizational change!! • Facilitate business learning – BPR does a good job of this • Empower employees – Within the system!! • Build common vision – FORCES common vision Korea Telecom 2007 Olson: ERP 5

Organizational Change from ERP 1. Productivity decline • Jobs redefined, new procedures established, ERP fine tuned, organization learns to process new information streams 2. Productivity gain • Develop new skills, structural changes, process integration, add bolt-ons 3. Payoff – Transform organizational operations to efficient level Korea Telecom 2007 Olson: ERP 5

Change Management • ERP often viewed as threat to job – May well change how job is done • New skills, new requirements – May lead to layoff • Difficult to make transition – Some firms are secretive • Attempt to avoid sabotage – Some firms are open • Seems best Korea Telecom 2007 Olson: ERP 5

Recent Cases • Pratt & Whitney Canada – Tchokogue et al. , International Journal of Production Economics, 2005 – 1996 -1999 • Marathon Oil – Stapleton & Rezak, Journal of organizational Excellence, Autumn 2004 – 1999 -2002 • Castle Cement – Lloyd, ITTraining, April 2004 – 2002 -2003 Korea Telecom 2007 Olson: ERP 5

Pratt & Whitney Canada • June 1996 began process – Canadian manufacturer of large engines • 1993 installed SAP R/2 • Also had 35 legacy systems – Wanted greater transparency to customers worldwide, greater agility • Lower customer response time, reduce WIP, increase inventory turnover, identify inventory & operating costs – Selected SAP R/3 Korea Telecom 2007 Olson: ERP 5

P&WC System • SAP – Financial accounting, Controlling, Sales & distribution, Materials management, Production planning, Quality management, Business information warehouse • • Hardware: Hewlett-Packard Operating System: HP/UX Database: Oracle 5 sites Korea Telecom 2007 Olson: ERP 5

P&WC Implementation • • • Five sites Minimal business change Project June 1996 to January 1999 1. 2. 3. 4. 5. • Scoping & planning 7 months Reengineering (very little) Process redesign (600 activities) 7 months Configuration (SAP options) 10 months Testing & delivery Aug-Dec 1998 Big-bang – Knew it was risky, prepared carefully Korea Telecom 2007 Olson: ERP 5

P&WC Project Team • P&WC: 7 groups (345 employees across company) – Represented main processes of the company – 168 IT analysts & change managers – STRONG DESIRE TO ENSURE EMPLOYEES REPRESENTED Korea Telecom 2007 Olson: ERP 5

P&WC Knowledge Transfer • 110 employees from the 6 most affected departments trained to be internal trainers • 1998 P&WC became a gigantic classroom – Massive involvement of internal resources – Used external consultants as well – 150 manuals adapted to diverse requirements – 3, 000 employees involved – Technical: basic navigation & task training – Business-oriented: processes & tasks Korea Telecom 2007 Olson: ERP 5

P&WC ERP Benefits • TANGIBLE – About $1 million in reduced costs in 2000 – Productivity 11% greater than planned – Receivables days outstanding reduced 6% – ROI in 30 -40% range • INTANGIBLE – Increased inventory cost visibility – my. SAP. com provided e-commerce capability – More flexible reporting system Korea Telecom 2007 Olson: ERP 5

P&WC Lessons Learned • Mounting environmental uncertainty & turbulence increased pressure for change • P&WC executives very positive about ERP • Openness to employee involvement helped – Studied prior successful implementations (systems failure approach) Korea Telecom 2007 Olson: ERP 5

Marathon Oil • Houston, TX • Over 28 thousand employees worldwide • 1999 evaluated fit of ERP – Wanted better linkage to oil & gas technical systems • Formed cross-functional team – Rigorous internal assessment of business processes – Developed business case – Studied failures of others (systems failure approach) Korea Telecom 2007 Olson: ERP 5

Managing Change Process • CIO of Nestle: No major software implementation is about the software – it’s about change management. • SAP changes the way people work, challenging their principles, their beliefs, and the way they have done things for many, many years. Korea Telecom 2007 Olson: ERP 5

Deconstructing Ownership Transfer • Goal: transfer ownership from project team to end users • KNOWLEDGE TRANSFER – Ensure employees know what to do • RESPONSIBILITY TRANSFER – Ensure employees participate • VISION TRANSFER – Help employees translate new tools & processes into superior business results Korea Telecom 2007 Olson: ERP 5

Communications Model • Gain commitment – Initially raise awareness – Shift to help move to deeper levels of understanding – Gain commitment only after understanding Korea Telecom 2007 Olson: ERP 5

Communication Tools • One-way channels – Newsletters, web site, road shows, town meetings, personal appearances • Interactive – Workshops, issue-tracking meetings, conference calls, collaborative web sites • Hands-on – Validation sessions with experts, sandbox to learn applications, workshops Korea Telecom 2007 Olson: ERP 5

Marathon Experience • Went live worldwide in 13 months – 8 major modules – Claimed industry record • Leveraged skills & commitment of employees as key resource • THIS COMES FROM A COMPANY USER, & TRAINING CONSULTANT – Don’t know how much is true, but sounds great Korea Telecom 2007 Olson: ERP 5

MARATHON Lessons • • • Software simply the tool Strong project management critical Involve people Staff adequately Need CEO support Change management integral discipline Treat scope creep like a virus Minimize customization Reward success Transfer ownership Korea Telecom 2007 Olson: ERP 5

Castle Cement • UK company, 1200 employees • Needed to replace legacy systems • SAP imposed by owner (German cement giant) Korea Telecom 2007 Olson: ERP 5

Castle ERP Team • Small team pulled from permanent jobs • 1: Customize system to Castle’s needs – Lots of business process redesign – During massive upgrade to SAP 4. 6 C • Initially implemented at 2 sites Korea Telecom 2007 Olson: ERP 5

Castle Training • Originally planned training in-house – Soon apparent beyond their capabilities – Hired outside trainer • Initially looked at key end-user training – Selecting who to train saw wide disparity in computer literacy – Brought people up to speed at a local college • ECDL qualification – Then SAP training Aug 2002 (105 users) • SAP basics • Navigation • Job specific Korea Telecom 2007 Olson: ERP 5

Castle Results • Initial phase on-line November 2002 • June to December 2003 150 more users trained (cumulative total 398) – Project proceeding well – Simplicity of approach credited • Next stage: train all 1, 200 staff – Expand the way SAP is used Korea Telecom 2007 Olson: ERP 5

Summary • Training crucial to ERP success – Consistent tendency to underbudget – But important in getting system used • Need to convince users – If you are laying them off, that is hard • Maybe even unethical • Need to reconcile this matter Korea Telecom 2007 Olson: ERP 5